Morning Report: Small Business optimism soars 8/14/18

Vital Statistics:

Last Change
S&P futures 2833 7.5
Eurostoxx index 385.12 0.21
Oil (WTI) 67.99 0.79
10 Year Government Bond Yield 2.88%
30 Year fixed rate mortgage 4.58%

Stocks are higher this morning after the Turkish Lira rallied 6%. Bonds and MBS are flat.

Import prices were flat in July but were up just under 5% on a YOY basis. This was pretty much all driven by oil prices which are inherently volatile and self-correcting.

Small business optimism is near record highs according to the NFIB. Availability of workers remains a big concern, and we are seeing record levels of compensation increases. Note that many of these comp increases are planned, so there will be a 9 month lag before it shows up in the government data. Credit availability is a non-problem. The biggest headache for small business is availability / quality of labor, not the cost of labor. I don’t know that we have cost-push labor inflation quite yet, but if that is the case, then it won’t be good for mortgage rates as it will primarily affect the long end of the curve.

HUD is electing to discontinue the Obama Administration’s controversial interpretation of the AFFH rule from the 60s, which means it no longer will be suing towns to force them to change their zoning codes to allow multi-family housing. HUD will focus on eliminating regulatory impediments to building more housing, and will tie grants to measures which increase building. In other words, The Obama Admin used a stick approach, while the Trump Admin will use a carrot approach.

Home prices rose 0.7% MOM and 6.8% YOY in June according to CoreLogic. They are forecast to rise 5% over the next year. Sales in the red-hot markets are down double digits as affordability issues and lack of inventory crimp activity.

The Despot reported better than expected earnings as homeowners choose to fix up their existing place instead of trying to move in a tight real estate market. Better weather helped the company rebound from their sales miss in the first quarter.

20 Responses

    • It reads like it was written by a high schooler


    • Rising income inequality was one of Reagan’s many unfortunate legacies

      Christ. I can’t take it. I feel like nobody is able to focus on the right thing.

      Rising income inequality is not “unfortunate” and it’s not a problem. It’s not even the right way to look at “the problem” if you think it’s a problem. WTF does it matter if the rich are getting richer? It’s not inequality that’s remotely the issue–it’s an utter non-issue–it’s that wages are stagnating or a lack of decent paying jobs at the low-end or a lack of capital in the lower-middle-class or the difficulty of saving or something like that. Rich people having more money than God is not the frickin’ problem.

      And I’m not opposed to a more progressive tax system. But “reducing inequality” is neither a desirable nor productively achievable goal. It’s certainly not unifying. I mean, it’s the least beneficial goal I can imagine. You don’t have to make poor people richer when you reduce inquality–you can make them poorer in all sorts of ways and STILL be reducing inequality while you do it.

      And it’s a frickin’ fantasy of ludicrous proportions to blame it on Reagan. Income inequality increases with a general increase in wealthy. Wealthy nations with robust economies will tend to have growing economic inequality. And more economic opportunity.

      And the focus on welfare is silly.

      Representative Barney Frank once said, “government is simply the name for the things we do together.”

      Or, government is simply the name for folks in DC taking your money and then spending it on things you’re opposed to and then calling you a racist or a Nazi for not thanking us for doing it.

      “the things we do together” … sez our entitle Feudal lords.


      • The 1950s and 1960s were so prosperous (especially for the middle class) because the US had no international competition. US corporations earned economic rents which they split with organized labor and government. By the 1970s, the rents were competed away. Good for consumers, but bad for organized labor.

        Second, Reagan ushered in the mother of all stock, bond, and real estate rallies. Who owns assets, but the rich?


  1. This is peak 2018.

    “What Happens to #MeToo When a Feminist Is the Accused?
    By Zoe Greenberg
    Aug. 13, 2018

    The case seems like a familiar story turned on its head: Avital Ronell, a world-renowned female professor of German and Comparative Literature at New York University, was found responsible for sexually harassing a male former graduate student, Nimrod Reitman.

    Mr. Reitman, who is now 34 and is a visiting fellow at Harvard, says that Professor Ronell kissed and touched him repeatedly, slept in his bed with him, required him to lie in her bed, held his hand, texted, emailed and called him constantly, and refused to work with him if he did not reciprocate. Mr. Reitman is gay and is now married to a man; Professor Ronell is a lesbian.”


  2. Good piece:

    “Taibbi: Censorship Does Not End Well

    How America learned to stop worrying and put Mark Zuckerberg in charge of everything”


    • “Many on the left lamented the Wikileaks releases of Democratic Party emails, but those documents were real news, and the complaint there was more about the motives of sources, and editorial emphasis, rather than accuracy.”

      Taibbi apparently doesn’t understand what journalism is and is supposed to do in 2018. It only has two real jobs: get Democrats elected and agitate for aggrieved identity groups that aren’t white and male.

      … understanding, of course, that Fox News isn’t actually “journalism”.

      I can’t imagine that sort of observation goes down well with most of the American left.


    • jnc:

      What Taibbi is saying is so obvious, it is depressing that he even has to say it, much less that he is one of the only people saying it. Meanwhile….he is dead on right about this, and not just in the context of the free speech wars.

      Americans are not freaking out about this because most of us have lost the ability to distinguish between general principles and political outcomes.


      Liked by 1 person

    • “But we should care. Censorship is one of modern man’s great temptations. Giving in to it hasn’t provided many happy stories.”

      But . . . but . . . we’re just censoring untruths! We’re just blocking Nazis! It’s a good thing!


  3. As a [now retired]lawyer who has never opposed a court nominee on “ideological” grounds and who thinks the POTUS ought to have his choices if they are properly vetted by the FBI and rated qualified or better by the ABA, I agree with Wittes’ article linked below and see the slippery slope he is predicting.

    And as he details, the fault is so thoroughly spread between the parties that there seems no hope either will step back from the brink. Ds don’t believe that returning to tradition [Kavanaugh should be a near unanimous vote, IMHO, with specific questioning about some of his writings and about one decision, in order to clarify concerns about his fidelity to stare decisis as a principle, taking a few hours, rather than some donnybrook two day session of irrelevant grilling to make partisan points] will be reciprocated by Rs. And vice versa, of course.


    • Mark:

      Wittes is right in his analysis of the current situation, but he is absolutely wrong about how we got here.

      The second point is that moral equivalence between the two sides is the only analytically serious way to understand our new reality.

      That is dead wrong. It is certainly true that the right and the left have adopted equivalent and escalating tactics, but that does not make them moral equivalents, any more than the fact that both the US and the Germans used aerial bombing in WWII makes them moral equivalents. The judicial confirmation process has become what it has become because of the rise of the “living constitution” theory of judicial interpretation, and the use of that theory to make an end run around the political process to achieve policy results through judicial fiat, Roe being the most significant and prime example. The result of this has been the complete politicization of the courts. And this transformation of the role of the courts from interpreter of law to imposer of policy has been exclusively the product of the left and the radicalization of the Dems.

      Wittes says that “The search for the original sin is a mug’s game”, but his attempt to demonstrate this begins only with the Bork nomination, going on to detail the increasing escalation in tactics used by each side. But he totally ignores the reason for the use of the tactics. Why were Dems driven to use the tactics they used against the clearly qualified Bork to prevent his appointment to the court? Why did the R’s – who even after the Bork and Thomas affairs were willing to nearly unanimously endorse RBG and Stephen Breyer – suddenly decide to start trying to put up roadblocks on D appointments to the courts? The answer to both is because they each (D’s somewhat ahead of the R’s) began to understand the widespread policy implications of Court appointments in an age in which D appointees were devotees to the ideas a “living constitutionalism” and “substantive due process”, and dedicated to both the maintenance and imposition of certain political policies.

      More than just this, though, Wittes does not seem to understand that the current partisan atmosphere regarding judicial appointments is not just the actual result of the type of Constitutional law practiced by the left, but is indeed precisely as it should be given the type of Constitutional law practiced by the left. If the Courts are going to be deciding political questions like how to regulate abortion, or how to regulate individual arms possession, or whether the definition of marriage should be expanded to include new and different relationships, then it is not only inevitable but indeed necessary that the appointment of the judges who will be making these decisions be a political and partisan debate. Only in this way will the electorate have even nominal control over the laws under which they live.

      As Justice Scalia once said “If judges are routinely providing the society’s definitive answers to moral questions on which there is ample room for debate … then judges will be made politically accountable.” And, I would add, they should be.


  4. I still can’t decide if this is parody.

    It has to be, but still…


    • I wish.

      It’s possible your status as a situational racial minority gave you the illusion that you didn’t have much in the way of racial privilege. Now that you’re living in a community that, at 75 percent white, roughly mirrors that of the American population, you’re feeling the full force of what it means to be white in a white supremacist culture and it makes you feel uncomfortable because up until now, in some unconscious way, you’d exonerated yourself from it. You were the “good white person” because you grew up among people of color.

      At best, the paragraph above is objectively super-racist. At worst, it’s delusionally irrational and super-racist.


    • The left generally has trouble conceiving of a world in which the cost of a regulation ever exceeds its benefit, or is indeed counterproductive.

      Thus, this will be perceived as a hostile attack against the American people and all that is good in the world. That would be my guess.


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